Set the policy to Enabled
and make sure Allow BitLocker without
a compatible TPM is checked.

BitLocker on Windows 7/Vista does not support passwords for system
drive if TPM is unavailable. If you do not like to use USB Startup key or memorizing BitLocker Recovery Key (which can be
used like a password), upgrade to Windows 8 or later which
supports passwords for system drive even if TPM is unavailable.